Ndubuisi Egwim breaks down a pension rule change that hits private arrangements: locums in limited companies, consultants with private pensions, and GPs using non-NHS schemes. Private consultants earning over £120,000 who sacrifice pay into pensions now pay National Insurance too, breaking a tax strategy that used to work.
No — the normal NHS pension is unaffected.
£120,000
Chapter five
Let me be clear, this does not affect the normal NHS pension. So NHS pension contributions, they are not basically salary price, so they remain completely unchanged. Okay, good news there now. But this change will affect like locums using limited companies, consultants receiving private employer contributions, GP partners using non NHS pension arrangements. In fact, anyone using private workplace salary salary sacrifice schemes need to check this as well. It could be that for for instance, you're a private consultant, you're earning over 120,000 and you're sacrificing some of it into a private pension in order to reduce your tax burden now and also help you avoid that 60% tax trap. Now you have to pay NI in addition to that. So this is huge because it directly targets the strategy many high ending medics used to manage the 60% tax trap. If you relied on this, you need to adjust. And yes, chapter five of the Money Wise Doctor has been fully updated to reflect this change. Now, tax efficiency is one skill every medic needs, but no one teaches. So we keep falling into multiple tax traps. It feels so unfair. I've read over 250 books on personal finance and business. Not one of them explains specific issues that affect medics like NHS pensions, financial anxiety, investing, student loans and much more.
